NHB may come up with norms on asset-backed securitisation

The NHB norm will allow housing finance companies to sell non-real estate loans.

Updated: Sep 06, 2012, 12:20 PM IST

New Delhi: The National Housing Bank (NHB) on Wednesday said it is considering coming out with norms that will allow housing finance companies to sell non-real estate loans and guarantees for funding purposes.

"We are also looking at securitising standard portfolios assets which are well known in the industry but the awareness about these assets is underlined and must be promoted amid the investor community," NHB Chairman and Managing Director R V Verma said at an event here.

Asset backed securities is an instrument backed by a loan or lease against assets other than real estate.

"From the investor point of view, we want to channelise the papers from institutional investors into the market and these investors would include mutual fund, pension, provident fund... We need to channelise long term funding into the mortgage market," he said.

"We are taking up the issue with government," he added.

Noting that there is deficiency of capital in the housing sector, Verma said that there was need to get capital into the sector through market oriented ways which is possible with securitisation.

Further, the NHB chairman said that securitisation would result in capital conservation, capital relief and its optimum utilisation through off-balance sheet transactions.

"...The lending sector cannot lend beyond a certain point due to capital constraints and with securitisation they would be enabled to continue to lend and can come over all constraints if they are able to securitise, Verma said.